Will Automatic Drafts With My Bank Stop After I File Bankruptcy?

/in , , , /by

Paying Bills With A CheckWith the ever improving online banking that is available through most banks, it is possible to pay almost all of your bills without ever stepping foot outside of your home.  There is no doubt filing bankruptcy can impact every situation of everyday life, but what about paying your bills?  What happens if you have everything automatically drafted out of your account each month?  Will that continue?

It depends. If your home mortgage or car payment is automatically drafted prior to your bankruptcy filing, then during the duration of the bankruptcy the mortgage company or vehicle creditor will likely stop automatic drafts and require you to manually pay your bill, or will only accept a mailed-in payment.  When you file bankruptcy there is an “automatic stay” that goes into effect which states that your creditors cannot contact you for a payment.  Many lien holders (such as your mortgage company or vehicle creditor) would rather play it “safe than sorry” and will code your account as being in active bankruptcy and will not automatically draft payments. In some cases, the creditor will not even send monthly statements.  If you wish to continue receiving monthly statements, contact the creditor to let them know. They may require you to send in written permission from your bankruptcy attorney, which is common practice with creditors.

If you have your utilities automatically drafted from your bank account, then they will likely continue.  If your automatic drafts are for credit cards and other debts, once you file the bankruptcy they should automatically stop since the debt is included in the bankruptcy. Those creditors should not be receiving payments at all – whether automatic draft or otherwise – due to the automatic stay.

Therefore, after you sign your petition and your bankruptcy is filed, it is imperative to make your monthly payments on your secured debts.  If your payment is normally automatically drafted, do not think something is wrong in the transaction and sit and wait for it to happen.  Go ahead and contact your creditor to find out the best way to make the payment (whether they will accept the payment over the phone or if you will have to mail in your payment).  Discuss any confusion you may have with your attorney.  Your bankruptcy is one step towards obtaining your financial freedom; you do not want to file bankruptcy and then become behind on your vehicle or mortgage due to the fact that they no longer just took their payment like they were before your bankruptcy filing.

Upside Down or Under Water on Your Home? Bankruptcy May Help!

/in , , , , , , /by

With the decline in the housing market many people find they are “upside down” or “under water” on their home.  In other words, do you owe more for the house than what it is worth?  If that is your situation and you have two or more mortgages, you may find that Chapter 13 bankruptcy is an option you have never considered.

Young Family in Front of House

Let’s look at an example where Chapter 13 bankruptcy may help you:

You have a home with a fair market value of $150,000.  Three years ago the house was worth $200,000.

You have a first mortgage on the home for $160,000 and a second mortgage or HELOC for $40,000.  In other words, you owe more on the first mortgage than the house is worth.

You can easily make the first mortgage but the second mortgage is more than you can afford.

You know it will be several years before the house is valued at $200,000 again.

As a result, you are stuck making two or more mortgage payments on the home and it isn’t worth it.

You are contemplating a short-sale which leaves you without a home and a “ding” on your credit or you are considering walking away from the home and letting the mortgage company foreclose.

If this is your situation, you should consider a Chapter 13 bankruptcy.  With the Chapter 13 bankruptcy, you may be able to “strip” or eliminate the second lien/mortgage.  Within the bankruptcy, you are able to eliminate the lien on the house as long as you complete the Chapter 13 bankruptcy within the three to five years required by the bankruptcy laws.  The number of years you must be in the bankruptcy will depend on your specific situation.  Let’s use the example above to see how it might work for you.

Your first mortgage is $1,100 per month.

You have $10,000 in credit card debt, a $2,000 personal loan and $750 in medical bills.

You owe $40,000 on the second mortgage that may be eliminated in your Chapter 13 bankruptcy.

You meet with the bankruptcy attorney and determine that you qualify for a Chapter 13 bankruptcy and it appears you are eligible to strip the second lien in the bankruptcy.

Your Chapter 13 plan payments are estimated at $1,300 – $1,500 including your first mortgage and other debts including the second mortgage.

Once the bankruptcy is filed, your attorney will file a lawsuit or adversary proceeding against the mortgage company or they may be able to simply file a motion to strip the lien.  Each bankruptcy court has their own requirements, so you should speak with your bankruptcy attorney to determine what must be completed in your case.

Once this process (either adversary proceeding or motion) is completed, the bankruptcy court will issue a judgment or order that voids the second lien on the house as long as you complete and receive a discharge in your Chapter 13 bankruptcy.

Once the bankruptcy is discharged and completed, three to five years after you file, you will resume payments on your first mortgage but the second mortgage and the other debts listed in your bankruptcy are eliminated and you will not be responsible for making payments on these debts in the future.

As a result, if you decide to sell your house in the future, you will only be required to pay off the first mortgage.  The second mortgage is no longer a factor.

This is obviously a simplified approach, so you should seek the advice of a bankruptcy attorney to see if stripping your second or third mortgage or HELOC is an option for you.  You are thinking this must be too good to be true otherwise someone would have mentioned this to you before!  It really is fairly simple.  This is just one way a Chapter 13 bankruptcy may assist you in keeping your home when you are upside down or under water.

Can a Creditor Call Me At My Job?

/1 Comment/in , , /by

Open Laptop - KeyboardHave you ever had a creditor or debt collector call you at work?  After the shock of the call wears off, you wonder “can they do that, is that legal?”  The answer of whether it is legal in North Carolina depends on your specific situation.

North Carolina General Statutes, Article 2, Section 75-52 outlines what is considered harassment by a debt collector.   Subsection 4 specifically addresses phone calls made by debt collectors to an individual’s place of work.  There are two key component to this subsection that help determine whether calling you at work is considered legal under the North Carolina Statutes.

Did you provide your work telephone number to the creditor or debt collector at any point in time thus telling them it is okay to contact you at work?

Does the creditor or debt collector have another telephone number to contact you at during non-working hours?

If you provided the debt collector your work telephone number, you may have unintentionally given them permission to contact you at work.  As a result, you want to correct that problem by telling the creditor or debt collector that the work telephone number is no longer a good number to reach you, and you are requesting they no longer contact you at that telephone number.  In addition, you will need to provide another telephone number they can contact you at during non-working hours.  If you do not provide the creditor or debt collector with another valid telephone number where they can contact you, they may continue to contact you at work even if you have asked them to stop calling you there.  Why, because the work number is the only telephone number they have to contact you.

You can easily stop creditors or debt collectors from contacting you at work,  however, you must provide them with an alternative number you can be reached during non-working hours.

If I Become Depressed Due To An Incident on the Job Can I Collect Workers’ Compensation Benefits?

/in , /by

Research on a White LaptopDepression caused by an accident or incident on the job is usually compensable.  However, there must be a medical doctor or a licensed psychologist opinion that the depression was caused by the incident or accident.  You cannot claim you feel depressed without a professional opinion substantiating the claim of clinical depression.

For example, a new healthcare worker was asked to assist rescue workers with the recovery of bodies of a major airplane crash.  Several children on the plane were killed and their bodies were badly damaged. The healthcare worker had children the same age as some of the plane crash victims.  The healthcare worker was severely depressed after the incident and needed psychological counseling.  This type of treatment is usually compensable.

If an employee was injured on the job and lost an arm, this, too, would cause depression for most persons.  The counseling needed by this person is usually compensable as part of their medical expenses.

Again the key factors are the depression must be work related and there must be a professional clinical diagnosis of depression. This depression must be related to and caused by the employment of the person (employee).

If you think you may be suffering from depression from an incident that occurred while you were working, you should speak first with a health care professional. After you have received proper care, you should then speak with a workers’ compensation attorney to determine if the depression may be compensable under workers’ compensation laws.

Can I Collect Workers’ Compensation If I Get Injured In the Parking Lot Of My Employer?

/in , /by

Construction Worker Carrying 2 by 4'sGenerally speaking, it may be difficult to receive a workers’ compensation benefits if you are injured in your employer’s parking lot. However, there are some exceptions. There are several conditions that must be met for you to receive workers’ compensation benefits for an injury that occurred in your employer’s parking lot.

If you are injured during the course and scope of your employment, in other words, if you are doing your job and are injured in the parking lot of your employer or any parking lot, the injury is compensable. This may be true even as you are walking from your car to the building or from the building to your car.  The key factor here is the wording “during the course and scope of your employment.”

Second, normally the parking lot must be owned, possessed, or controlled by the employer. If this is not the case, and you were not performing your job, the injury is usually not compensable.  What if you were across the street in an adjacent parking lot which was not controlled by your employer immediately before work? You slipped and fell on the adjacent parking lot before you entered the premises of your employer. This injury is usually not compensable.

The term  “during the course and scope of employment” is essential in receiving workers’ compensation benefits.  This is true even if an accident occurred in the parking lot of your employer.

For example, on your day off you bring your friends to your employer’s ice covered parking lot. You decide to show them your potential Olympic ice skating skills. You slip on the ice and break your leg. Is this a compensable injury? Probably not. Why not? Because you were not performing your job. It was your day off and the ice skating skills you were showing your friends had nothing to do with your job duties. The injury was not in the course and scope of your employment, even though it happened on your employer’s parking lot.

However, if your employer told you (as part of your job duties) to take some potential customers to the parking lot and impress them with your skating skills as a marketing gimmick for the employer, the injury would probably be compensable.

If you believe you have suffered an injury in the parking lot of your place of employment that you should be able to recover for under workers’ compensation, contact an attorney immediately to discuss the specifics of your case.

Can I Collect Workers’ Compensation Benefits If I’m Injured On the Way To Or From Work?

/in , /by

Arriving to North Carolina on RoadwayGenerally, injuries sustained going to and from work are not compensable as a workers’ compensation injury.  However, there are a few exceptions to this general rule. The following is a list of injuries that may be compensable under workers’ compensation.

First, if the injury occurred on the premises of the employer as the employee is arriving or leaving work, the injury may be compensable. A common example would be a person slipping on an icy spot as they step onto the employer’s parking lot as they arrive for work.

Next, if the employee is performing a “special errand” for the benefit of the employer.  For example, the employer may ask the employee to stop by a paper goods store to pick up a case of copy paper on his way home after the employee has “clocked out,” and the employee is injured in an accident before they get to the store, but after they leave the employer’s premises, the injury will probably be compensable.

Another example is when the employee leaves their home, but instead of going directly to work, the employee must go by and see a customer of the employer.  If an injury occurs driving directly to visit the customer, the injury is usually compensable.  In the alternative, if the employee is a salesperson and in route to visit a customer and the employee decides to stop by a bar and have a few drinks and falls and injures himself in the bar, this injury is usually not compensable. This is commonly known as a “frolic and detour”.

A final example of a compensable injury is when an employer is responsible for carrying the employee to and from work as part of the employment contract.  For example, the employer has agreed to pick up construction workers at their home and carry them to the construction site.  Along the way to the construction site, the employee is injured in an automobile accident, this injury is usually compensable.

The workers’ compensation rules surrounding injuries that occur going to or from work are complicated; you should speak with a workers’ compensation attorney regarding the specifics of your situation to determine whether you may be able to file a workers’ compensation claim due to your injuries.

What Is Considered A Transfer For Bankruptcy Purposes?

/in , , , /by

Young Family with ChildrenIf you are filing bankruptcy then a portion of your bankruptcy petition called the Statement of Financial Affairs asks if you have made any transfers.

Section 10 of the Statement of Financial Affairs requires you to, “list all other property, other than property transferred in the ordinary course of the business or financial affairs of the debtor, transferred either absolutely or as security within 2 years immediately preceding the commencement of this case. (Married debtors filing under Chapter 12 or Chapter 13 bankruptcy must include transfers by either or both spouses whether or not a joint petition is filed, unless the spouses are separated and a joint petition is not filed.)”

So what exactly does that mean?  It means if you have sold a major tangible asset such as a house, car, Jet Ski, boat, ATV, basically anything that is titled, tagged or taxed, needs to be listed in this area.  Also, if you have transferred ownership, this information will be included in this area as well.  So for example, you buy a car for your 16 year old, and after they graduated, you transferred the title to their name, then that transaction would need to be included in this area as well.  Any property sold or transferred within the last 2 years must be listed in your bankruptcy. We encourage our clients to tell us about any property that has been transferred in the last five years.

Beware though; the bankruptcy Trustee will want to see what you received for this transaction.  Did you sell a house that was worth a million dollars, owned free and clear, for $5 bucks?  This is his way of catching Debtor’s trying to “beat” the system.  In such a case, the Trustee would reverse the transfer, sell the property and use that money to pay off your debts.  Anything remaining would go to him.  If you have sold or transferred a property within the past 5 years it is critical to discuss that transfer with your attorney so he or she may advise you correctly.

How Do I Know If There Is A Lawsuit Or Judgment Against Me?

/in , , , , , /by

We get this question often!  The answer for the most part is quite simple.  If you have been sued, unless you have changed your address and have not updated it through the post office, you likely have received notices that were being sued.  To understand the process of a lawsuit better, check out the blog post we wrote about whether bankruptcy can help you if you have a judgment.

Young Family Sitting in Front of House

Should you be a person who has moved and slipped through the cracks, finding out if judgments are against you is still a quite simple matter.  You will need to go to the Clerk of Court for the county that you are (or in the case of moving, were in) and have them do a judgment search on you.  They can pull up the person/creditor who sued you, date it was entered into the court system, amount you owed at the time of the lawsuit, what the daily interest is and the amount you currently owe.  For example, if you lived in Union County, North Carolina for the past 9 years and you just now moved to Mecklenburg County, North Carolina,  your judgments are likely still registered in Union County. Therefore you will need to check there first. (But checking in your current county of residence isn’t going to hurt anything either!)

From that point, you will need to determine if the suit has attached to any real property you may own.  For example, let’s say for our purposes, you have lived in Mecklenburg County for the past 10 years and never moved, you own your home by yourself and there is a judgment against you.  Once that judgment is placed against you, it will automatically attach itself to your home.  If you have previously been sued , you will need to discuss that with your attorney to make sure the proper steps are taken to remove that judgment from your credit, especially if there is a lien involved.

If you have a lawsuit or judgment against you then you may want to contact a Charlotte bankruptcy lawyer, Greensboro bankruptcy attorney or Winston-Salem bankruptcy lawyer to learn more about your rights.